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Auckland market turning for investors

Weaker prices for houses, particularly in Auckland, could mean the start of the long-anticipated downturn in the market.

Thursday, January 20th 2022, 1:36PM 2 Comments

by Sally Lindsay

Compared to this time last year, there are fewer investors in the market due to interest rates, higher prices at auctions, uncertainty about further legislation and far tighter lending rules.

REINZ’s House Price Index shows Auckland had the weakest performance of all regions over the past month resulting in a middle of the road performance compared to all regions over the past 12 months.

Data shows although Auckland’s house prices rose 21.3% annually, the region had the biggest drop at 2.3% in December from its record peak of a 3.1% increase in November. 

Average prices fell for all of Auckland’s urban districts between November and December apart from Franklin.

Prices in Auckland City fell to $ 1,434,500 from $ 1,434,500 in November; in Manukau they dropped to $ 1,225,000 from $ 1,230,000; North Shore fell to $1,443,000 from $ 1,443,000; Waitakere fell to $1,170,000 from $1,190,000; Rodney fell to $ 1,305,000 from $1,310,000.

Papakura had the steepest drop from $1,190,000 in November to $ 1,010,000 in December, while Franklin prices rose from $ 973,000 to $ 995,000.

The weak performance for the HPI in Auckland last month resulting in a middle of the road performance compared to all regions over the past 12 months, says Jen Baird, REINZ chief executive.

The market softened, partly due to the Christmas break and the fact many buyers are still getting their heads around the tightening of lending criteria.

“As house prices continue to rise, along with restrictions in lending criteria, the number of first home buyers declined — however, it is evident these credit changes are impacting all buyers across the board to a certain extent,” says Baird.

While listing numbers rose by 12.6%, in December, some vendors are choosing to hold off. “Sellers still have high price expectations, but unlike in November, some of these expectations are not being met as there is less buyer competition in certain areas.”

Sales by auction was significant in December — 48.9% of properties were cleared.. Baird says The high number of auction listings versus other methods of sale is a further challenge for buyers whose lending criteria may not enable them to buy at auction..

Independent economist Tony Alexander says courtesy of the combined effects of the Credit Contracts and Consumer Finance Act changes, tightened LVRs, and banks experimenting with DTIs, the ability of people to get a mortgage has declined substantially.

Even buyers with substantial deposits are being denied mortgages on flimsy grounds, such as buying too many coffees, having a Netflix subscription or spending money on Christchurch presents. 

“Buyers in particular have been denied finance access something quite clear from the results of my December survey of mortgage advisers, who report a sharp fall in the number home buyers stepping forward for assistance in raising finance for a house purchase,” says Alexander.

“Given intransigence shown by the government and its low willingness to listen to feedback, the chances of the CCCFA changes being watered down to any meaningful degree are fairly slim – though not zero.

“Inability to qualify for a mortgage, or at least one as large as desired, will be a key factor causing house price growth to stall this year, alongside higher mortgage interest rates.”

« Landlords and investors still in sights of anti-investment sentimentTrade Me property prices reach highest on record »

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Comments from our readers

On 24 January 2022 at 11:16 am Michael Donovan said:
CRIKEY.....
Am I meant to be writing in with these three words?

TOLD YA SO

And remember, it won't be a short, nor mild correction.
(Again, putting my 'curlies' on the line)

Someone said: "That the govt isn't worried about any housing shortage," and continued "they'll just jab thousands of people to an early demise and the age-old formula of supply & demand will launch into reverse effect?"

He could have a point?
On 16 February 2022 at 7:46 pm Christina Ahearn said:
lucky people in Christchurch ..." spending money on Christchurch presents" I think you mean Christmas...

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 ▲4.29 ▲5.09 ▲5.35
Kainga Ora ▲5.43 ▲4.57 ▲5.58 ▲5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 ▼5.14 6.05 6.15
TSB Special 4.79 ▼4.34 5.25 5.35
Unity 5.65 ▲4.80 ▲5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 16 May 2022 9:03am

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